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Flextronics International Ltd (NAS:FLEX)
Beneish M-Score
-2.47 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Flextronics International Ltd has a M-score of -2.47 suggests that the company is not a manipulator.

FLEX' s 10-Year Beneish M-Score Range
Min: -6.65   Max: 1.33
Current: -2.47

-6.65
1.33

During the past 13 years, the highest Beneish M-Score of Flextronics International Ltd was 1.33. The lowest was -6.65. And the median was -2.48.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Flextronics International Ltd for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.0124+0.528 * 0.8551+0.404 * 1.1513+0.892 * 1.1529+0.115 * 1.1724
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.902+4.679 * -0.0349-0.327 * 1.0018
=-2.47

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,895 Mil.
Revenue was 6642.745 + 6723.934 + 7183.442 + 6410.106 = $26,960 Mil.
Gross Profit was 380.785 + 362.144 + 398.619 + 368.423 = $1,510 Mil.
Total Current Assets was $8,989 Mil.
Total Assets was $12,068 Mil.
Property, Plant and Equipment(Net PPE) was $2,255 Mil.
Depreciation, Depletion and Amortization(DDA) was $467 Mil.
Selling, General & Admin. Expense(SGA) was $866 Mil.
Total Current Liabilities was $7,233 Mil.
Long-Term Debt was $2,074 Mil.
Net Income was 173.887 + 42.975 + 145.157 + 118.205 = $480 Mil.
Non Operating Income was -44.009 + 38.544 + -29.486 + 0 = $-35 Mil.
Cash Flow from Operations was -81.169 + 98.153 + 764.549 + 155.182 = $937 Mil.
Accounts Receivable was $2,480 Mil.
Revenue was 5791.125 + 5295.318 + 6123.321 + 6174.841 = $23,385 Mil.
Gross Profit was 311.035 + 195.657 + 246.462 + 366.772 = $1,120 Mil.
Total Current Assets was $8,228 Mil.
Total Assets was $11,169 Mil.
Property, Plant and Equipment(Net PPE) was $2,278 Mil.
Depreciation, Depletion and Amortization(DDA) was $574 Mil.
Selling, General & Admin. Expense(SGA) was $833 Mil.
Total Current Liabilities was $6,948 Mil.
Long-Term Debt was $1,651 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(2894.622 / 26960.227) / (2480.022 / 23384.605)
=0.10736638 / 0.10605362
=1.0124

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(362.144 / 23384.605) / (380.785 / 26960.227)
=0.04789159 / 0.05600735
=0.8551

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (8989.423 + 2254.664) / 12067.824) / (1 - (8228.468 + 2278.266) / 11168.924)
=0.06825895 / 0.05928861
=1.1513

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=26960.227 / 23384.605
=1.1529

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(573.724 / (573.724 + 2278.266)) / (466.993 / (466.993 + 2254.664))
=0.2011662 / 0.17158408
=1.1724

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(866.088 / 26960.227) / (832.876 / 23384.605)
=0.03212466 / 0.03561642
=0.902

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((2073.854 + 7233.212) / 12067.824) / ((1650.536 + 6947.726) / 11168.924)
=0.77122984 / 0.76983799
=1.0018

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(480.224 - -34.951 - 936.715) / 12067.824
=-0.0349

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Flextronics International Ltd has a M-score of -2.47 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Flextronics International Ltd Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 0.89890.84540.95081.38450.5811.35120.90640.96571.0121.1532
GMI 0.38081.28750.99281.15431.03180.81930.91381.07031.04350.897
AQI 1.06350.99540.94280.89740.26820.54150.75021.55361.04221.0647
SGI 1.09480.9611.23321.46171.1230.77911.18951.02470.8021.1077
DEPI 1.60670.9141.13440.77690.97890.91511.38680.82181.06311.2246
SGAI 1.06570.84910.9571.08471.00431.00580.89461.05281.14010.9807
LVGI 0.97310.97890.97511.14011.46630.96690.99060.98630.9651.0534
TATA -0.0347-0.0410.0125-0.0867-0.6467-0.0539-0.0224-0.0268-0.073-0.0635
M-score -2.88-2.68-2.25-2.17-6.22-2.89-2.58-2.38-2.95-2.56

Flextronics International Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.96570.94761.01711.15551.01141.14041.0971.07131.15391.0124
GMI 1.07031.02650.93040.95011.04321.1071.18991.04910.89720.8551
AQI 1.55361.38081.56311.88011.04221.22731.12110.92391.06471.1513
SGI 1.02470.93820.85720.82120.80250.84030.90991.00361.10711.1529
DEPI 0.82180.90550.93040.9091.06310.98130.99841.23861.22461.1724
SGAI 1.05281.09041.14221.10251.14051.15821.13241.09550.98040.902
LVGI 0.98630.95920.92410.94660.9651.01371.05451.0571.05341.0018
TATA -0.0286-0.02-0.0331-0.0651-0.0694-0.0829-0.0535-0.0585-0.0656-0.0349
M-score -2.39-2.52-2.56-2.48-2.94-2.77-2.61-2.70-2.57-2.47
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